Transcripts For CNBC Closing Bell 20140724

Well have them first with the best analysis you can find. That all starts after the bell. Then after that in exactly two hours, president obamas exclusive interview with our Steve Leisman will air in its entirety right here on cnbc. Steve will join us on the show beforehand to tell us some of the highlights. We do know the president wants to talk about tax inversions, letting it be known he will support legislation to stop companies reincorporated overseas to escape the 25 tax rate here in the u. S. Well have much more as the president and Steve Leisman get into it over the economy. Melissa lee and i will anchor a 5 00 special on that coming up. It is a bill sandwich tonight. Lucky you. Also it would be big ceo interviews just ahead. Dunkin brands disappointed today. Jetblues dave barger will be here. Youll hear from both of these ceos on todays closing bell. An hour to go and the do you jones industrial average down again today to the tune of about 21 points. Yesterday it was the lone major index to sit out of the rally that took the s p to new highs. But today giving up some of those gaines, the broad market index is off by about a point, the nasdaq off about four. Were waiting for xee noen componenxoe components of that index to report. Heather hughes, jim lowell, larry glazer, drew nordlick from highpower and drew, it says you are building cash. Why. And two, where are you selling the billed cash . Were maintaining diversified approach across portfolio accounts keeping allocations to equities to fixed income to cash an alternative as new cash has come if from cash and earning investments we are keeping it on the sidelines. Our concern is real lit lack of volatility in the marketplace. Weve gone 1,022 days without a 10 correction. Thats the third longest in 25 years. A lot of that is really geared towards the fact that the fed seems to have outlawed volatility. Investors are continuing to pile money into equities with the assumption that the fefb deral reserve is there, it is going to be there but we have three more months, then at that point the fed is out of the way. The last two times the fedex ited kwaquantitative easing increased volatility. Weve moved from 15 on the p ebay sis from the s p to 17 1 2. We have concerns. Wed use any kind of down draft as moments to add to equities. Youre building cash to wait for that down draft perhaps. Larry glazer, what buttize . Is it right to attribute so much of this to the fed to the markets resilience, i mean, when you have geopolitical events this concerning taking place around the world . No question. This has been a relatively unremarkable Earnings Period amidst an expensive and extended market. With that said it is still exciting and creates opportunities for investors if you are looking hard enough. We see those opportunities are really three fold. One is in the traditional obvious place where you see an intersection of growth and momentum. Something like Large Cap Technology which still looks cheap relative to history. Not super cheap but cheap enough you can put money into a cash rich company. In turnaround plays, consume discretionary revenues like ther like theyre improving. The worst may be behind us. Finally, the down and dirty. If are you truly a contrarian here, you see where guidance is weak. Caterpillar terrible guidance going forward. Mining stocks get killed. If you have a strong stomach you can start to look at those. You have to dig and look while everyones at the beach. During this earnings season, the markets have behaved pretty well. No question about it. Dont worry about low volatility or the fed as much as the prior guest. Certainly wouldnt want to be market timing with cash. We see the fed being accommodative and flexible. Thats a good safety net underneath this market, no question. But the fundamentals continue to drive us to the believe that were seeing slow gloet, no no growth. Not just in the u. S. But even a little bit tentatively inside the jur row zone. Of course we are very focused on what consumers are doing with their money and they are buying big ticket items, whether existing homes, whether it is cars. We saw ford deliver its First Quarterly profit from the eurozone in three years. So we see signs that the consumer is not dead and not out. Unless and until we do were going to stay focused on finding managers who know how to cherrypick what is certainly a very lofty market. Heather, do you agree and where are you seeing opportunity right now . I think it is interesting. I heard the consumer discretionaries were hearing, if you believe in the contrarian play, that they may turn around. If you believe in a stronger consumer. But i dont know that the data is indicating that right now given housing that we had this morning was weaker, job Participation Rate still has issues. Slack in the labor force or declining wage growth isnt even keeping up with inflation. Can that help consumers or spending powers through discretionary spending. We need an increase. And wage growth i think for the market to continue higher. Even on the backs of earnings revenue is ticking a little bit high sorry thats reassuring. Were not just cost cutting on the bottom line there. I agree with that point. At the end of the day it is earnings that drive the market, not geopolitical events. The israeli stock market is up since the conflict in gaza began because investors see through that. They say this is where growth is coming from. In a world were so desperate for growth. Investors are smart enough to reward them but theyll also punish people that dont have future guidance. Tell that to the russian stock market. Rick santelli, very good jobless claims number this morning much lower than expected. Is that why the 10year is back above 2. 5 . I think thats part of it. Think there are technical reasons as well. We basically held the low close yield of thee, 2. 44, on may 8th. Based on the 62,000 drop in last months new home sales, were in the 400s now. When it comes to the consumer, depends on which consumers a er are looking at. The middle class, the sccar is e new house. When you look at the markets i see some unusual things we should be aware of. The british pound is losing a bit of ground against the dollar. The whole tightening with mr. Carney seems to be a backtrack. On the china front at their best level against the green back since march. Were seeing widening on the credit stretch. If you look at barclays, whether it is Investment Grade or high yield. But thats under one month. You open the chart out much bigger, you dont see it and we dont want to forget theres been huge amounts of issuance since mr. Draghi said he would do anything and if there is a lot of issuance, maybe investors have a limited menu, broccoli and spinach. But if are you hungry enough you eat broccoli and spinach. Want to go back to drew to something that jim lowell said. It is kind of a dig. You said we wouldnt want to be market timing with client cash here. Im interested what you would say in response because a lot of people are sitting now in conservative positions waiting perhaps for a employment to get in who have been wrong and caught on the wrong side for quite some time. Yes. Were not big fans of plugging your nose and just buying at any time. The reality is that weve seen pe multiples go from 15 to 17 1 2. Earnings moving up at a 5 clip but revenue is only at 3 . We are sitting in a market with a lot of Financial Engineering behind it. The Federal Reserve has kept Interest Rates low so Corporate America can borrow on debt and buyback stocks youre not sitting there kicking yourself that youre missing this party . No. So bill, as i mentioned, we do have an exposure to equities. What were not doing is buying at s p right now alltime highs in july 2014. The reality is so you had a nice rally in 2007 that didnt end exceptionally well. Could you have bought that all the way up. If you didnt sell or didnt pick your points you ended up hurt by it. Volatility is low right now. Earnings are not accelerating at the pace necessary to support a 17. 5 handle on a pe ratio. But is this 2007 . All over again . No. No. Im making the analogy to the fact that you have markets that go pushing too alltime highs which thats the last time we experienced alltime highs. Unrealized profits shouldnt be spent. Thats what hes saying. Were not buying, were not buying the market, were buying sectors inside the market. Our managers are buying stocks inside of those sectors. I think we agree there are selective opportunities to be had. Certainly maintaining a well diversified portfolio makes sense. But i would certainly worry about just parking all new incoming cash. Look at the health care sector. You are getting lower risk, higher return driven by earnings and fundamentals, not by geopolitics whatsoever. That would certainly be an area id look to. The market average doesnt tell the clear story. Janet yellen said certain sectors of the market were telling. Biotech. You do have a bifurcation inside the market. You have those stocks that are performing well and those stocks that are not. What it comes down to is free cash flow. If you have companies that are manufacturing earnings by buybacks or theyre not experiencing revenue growth, those are the companies you want to stay away from. Those are the companies that are going to get hurt as soon as we see increased volatility. Look for companies that have free cash flow. If you dont buy those you are taking an inordinate amount of risk. Im slokd hes adding to the 10. 6 trillion thats around the world sitting in cash. Thats amazing. Wonder what are janet yellen thinks is undervalued right now. Get her opinion on that. Yeah. Thank you all for joining us. The California Public employees Retirement Systems now dealing a major blow to the hedge fund industry. Calpers is considering scaling back Hedge Fund Holdings significantly. This goes to a theme weve been following on the show and what we were just discussing. Kate kelly joins us now with the details on what could be a precedent setting morph. Why the dissatisfaction . Kelly, calprs has been a trail blazer before. Todays news could be very bad for hedge funds. California state Retirement Fund is considering dialing back its Hedge Fund Exposure substantially hoping to sim ply its 300 billion portfolio. Calprs staff are scrutinizing their Hedge Fund Holdings spread out over a couple dozen funds. In recent years it included names like the blue trend fund, among many others. While no final decision has been made, the staff will present their findings to the Investment Committee in the coming months and they may wind up reducing their Hedge Fund Investments starting this fall from what im told and also as the wall street journal reported this morning. The move comes at a paradoxical time in the Hedge Fund Business where assets are at a record high of 2. 8 trillion according to hfr, yet performance has been und und und underwhelming. Over the past three years, hedge funds have returned an average of 3. 6 for Pension Funds tracked by wilshire trust. Beaten roundly by categories like private equity, fixed income and equities. Kate, yet some of these themes still with the hedge fund community. Position remains bearish. Well see if the next six months bear out the way the paf six months have. Again, could be a trend setting move. I sit on two nonprofit boards. A couple years ago both of those boards were looking at hedge fund as a way to reduce the volatility in their portfolio. I happened to be against it. Not that im that smart. But it just seemed like it was too complicated an issue to get into. Now there is no volatility anyway and theyre looking to get out of those hedge funds. Precisely. And are you that smart, bill. Kate, thank you. 45 minutes to go into the close. Speaking of equities, we have some pressure across the board. The dow is off 15, a point off the s p and five off the nasdaq. S p went out yesterday at a new high of 1,987 and change. Another giant wave of after the bell earnings heading our way. We got amazon, starbucks, visa, pandora, among the big names reporting tonight. Well have the numbers to watch and bring you those results the instant they hit the tape. These are likely have a big impact on tomorrows markets. So you cant afford to miss it. Ahead on this program, Dunkin Brands getting dunked after blaming bad weather for weak u. S. Sales today. Dunkin is almost putting its earnings out for the rest of the year. The companys ceo will join us to explain whats going on in a cnbc interview next. Ill be cohosting a cnbc special report at 5 00 eastern along with melissa lee. President obama will be speaking exclusively with our Steve Leisman. A lot to talk about, including his administrations pushing back against tax inversions by major corporations. It is a political hot potato right now. Well get into that starting at 5 00 eastern. Dont touch that remote. Is in a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. E financial noise financial noise financial noise financial noise markets. The s p, any positive close will and new alltime high because we set one yesterday. Nasdaqs down three points. The dow, were down nine points right now and we are about 60 points 62 points away from an alltime high so were keeping an eye on that. Not likely to happen today, kelly evans. In the meantime, dominic is covering some of the big movers today. Start off with shares of mankind corporation, a Biopharmaceutical Company thats taken a hit after cnbc. Coms announced it is believed the stock will trade down 90 in value. Go to cnbc. Com for more on this story. Shares are down 5 or 6 just off their session lows. D. R. Horton has lost 11 of its value a day after reporting a drop in quarterly profits and really missing analysts expectations. Driving down other Home Builders like lennar, pulte and kb home. Dunkin down off session lows. The Company Reported profits that matched wall street estimates but but, sales fell short as the company blamed bad weather for some of its results. Back over to you guys. Investors not buying the weather excuse when it comes to dunkin today. Were wondering if we are. Reaction now in our first on cnbc interview with nigel travis. Got to say, appreciate you coming back but i read a portion of the transcript of your Conference Call with analysts today. You talked about the early spring rain that you attributed to some of the sales disappointment. People dont drink coffee when its raining . Well, bill, this is a business that is based on ritual. If people are disrupted by very high storms or rain, they dont get out their car, they dont stop off at the drivethrough, that disrupts their normal pattern. But i also said on the call the weather wasnt a major part of the reason we missed. Were disappointed we missed. It doesnt hit our normal high standards. But i think what was important about the quarter is, despite the disappointments, we saw some very good news. We grew our transactions and we grew it in an industry that seems to have stagnated. Today npd came out with numbers that showed that in the 12 months to may this year, 61 billion visits were made to restaurants, which is actually lower than prerecession numbers. So we gained share, we gained significant share over the last few years. Our franchisee profitability is still very high. So despite the disappointments, and we have to do better, there are some silver linings. That is going to be the question, nigel, for analysts, for investors following this, how do you do better . How much more difficult is it going to get out there . There are headwinds on both the ice cream side with Baskin Robbins and dunkin as competitors like mcdonalds are offering free coffee lately. Theres cost pressures in dairy and other key components. Theres just, as you said, this shift away from some restaurant visits. So how seriously are you rethinking strategy here . Does this mean you have to get much more aggressive, for example, in rolling out new restaurants across california and the west . Kelly, thats a very complicated question. Ill just pick out some elements of it. We actually feel we have very good plans for the rest of the year. I think two or three things id focus on. Weve got some great new products. Weve got apparently the southwest state burrito thats doing very nicely. Weve got a series of new drinks coming out. You mention ice cream. We had a spectacular quarter on Baskin Robbins. We grew 4. 2 . They had the best quarterly store development numbers since 2006. You talk about competition, you talk about mcdonalds. We beat mcdonalds by a significant range. So we feel actually that weve got the traction as we go into the Third Quarter. We grew every month sequentially more positively. So i think were in good shape as we go into the third and Fourth Quarter and it was really a math reason that we took down our guidance for the year. How important let me ask you. Were running out of time and we got so many things to ask you about. But mobile marketing and customer retention programs. You have Something Like starbucks does. How important is that to keeping a customer coming back to dunkin because they have a card in their pocket or a mobile app that theyve accessed that makes it easier to pay for the product when they get to the store. Bill, thats absolutely essential and i think starbucks and i are probably leading the field. Weve had 8 million downloads of our app. Weve had 1. 3 Million People sign up for our loyalty program. Thats the stickability, as i call it. Thats the way to make people come on back. During the quarter we did some tests where we show we can actually change behavior. So to answer your question, it is going to be a differencemaker going forward. Can you get out of the rain and buy a cup of coffee then . Well, im actually looking for you and kelly to do something about the rain. Can you help us a little bit there. Thats news to me. Ill put in a good word. Listen, does 29 growth that you guys for samestore sales in the u. S. I would assume are hoping to achieve and a lot of analysts think youre going to be achieving in the quarters ahead . 2 growth. Is that still realistic . We would not have put out the guidance for 2 to 3 , kelly. Could i ashisure you, i wake up every morning. Look at the numbers. We have emails usually before 6 00. Were on it. We have some good programs. Our franchisees become very flexible. Theyre moving very fast to compete with competition. Theyre right behind our programs like perks. Theyre in our news sales players that were putting in. So i feel good about the rest of the year and i feel were going to hit our guidance. Thats why we put it out there. Nigel, thank you. Always good to see you. Thank you. Heading towards the closing, about 35 minutes left in the trading session here. Has not been a very volatile day. The dow down about 30 points, up about 11, were downen nine right now. S p is in record territory. It is definite lay namedriven market today. Walmart tapping the person who leads its China Division to replace its u. S. Ceo. Can he right the ship that walmarts most important division, walmart experts will weigh in on this next. Later, keep it right here. We have todays after the bell earnings sweep, including amazon, starbucks, visa and pandora, among the big names on deck. Thats still to come here on the closing bell. Stay tuned. Just take a closer look. It works how you want to work. With a Fidelity Investment professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. 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The s p, there is the lone green arrow. It has just turned positive. Remember, any positive close from there will be a new high. The others for the most part still down fractionally. The transports actually go down once in a while. Amazing. Walmart stock also losing ground today. Its u. S. Ceo bill simon is stepping down and the giant retailer is turning to its Asia Division to try to fill that position. Courtney reagan has the latest on this move for us now. So if are you actual surprised by simons departure, he was passed over back in november. Simon will walk out the door with a nice retirement package on august 8th. According to walmart, simon will receive a total of 9. 17 million between his Retirement Benefits and 300,000 for staying on as a consultant for six months. The current ceo and president of walmart asia will take over as walmart u. S. Ceo just three years after joining walmart china from woolworth australia, this move marks his second promotion since june. Sales at walmarts u. S. Locations open for at least a year have fallen for five straight quarters. Traffic has been lower for six consecutive quarters. While a lot of retail remembers in need of a ceo, it wont be simon. The noncompete clause in his retirement agreement precludes that for two years. We want to talk more about bringing this new ceo over from asia, what it means to walmart here in the United States. Joining us, bud gotch from raymond james. Do you expect a big shakeup here . I dont expect a big shakeup at all at walmart. I think they are on a prescription to try to right the ship. Think thats been a big focus of doug as hes taken over the company. But i think the company we have at least comps improving toward the back half of the year for the head and thats our expectations. Where is that positive momentum from walmart coming from, by the way . Well, we dont have the positive momentum yesterday. I said in the back half of the year. We think it will come as the economy continues to improve and they go up against these here comparisons. Courtney, do we know anything about greg foran . We know he came from woolworths in australia. He joined walmart to run the China Division. Effectively turned things around. Was promoted to run all of asia. Thats early june. Now hes being tapped again. From my understanding, he really does have a lot of faith in mr. Foran and thinks hell and very strong leader. Potentially also to promote him double basically in two months. Budd, is walmarts only hope here is the u. S. Economy picks up in the second half and finally helps the walmart shopper enough to make a difference here . Thats at least what bill simon was telling us when we interviewed him back in early july. He said the job market may be improving but it is not really improving for the folks at the middle and low end. Thats the folks at the high end. So our shopper is still really strained. That was at least simons explanation of whats going on out there. Remember, walmart is a huge, huge retailer. The Worlds Largest so it takes a lot to move the needle even a little bit. What do you think, budd . I would second that. We see other retailers in the low end also having pressure in talking about the tough times that its consumer is having. Walmart does a very good job of serving that customer. But still, when that customer is under pressure our results are going to be tough. When it is raining outside, think Everyone Needs an umbrella. We know theyre not buying dunkin coffee, apparently. Budd, so your outlook is good for the next six months but do you think that having a new guy at the helm, as kelly suggested, will mean a shakeup in the mix at walmart going down the road . Bill, i really dont think so. I think that well see little moves as it happens. When bill came in he did make some changes because if you recall, at that time they had something called project impact where they were taking merchandise out of the stores and widening the aisles. And he put merchandise back in the aisles and really continued back on a path to make walmart what walmart has always been. I dont see much change in that. Walmart worldwide now is on that prescription of every day low cost, every day low price. So they really live that and i think thats going to continue and i think thats one of the reasons why they feel comfortable bringing greg in to run walmart u. S. Im not all that surprised to see bill leave. That was when he didnt get the top job, i think that was something that was probably pro ordained in the cards. But it took him six months and i think that was a very graceful thing to do, not to be a distraction to doug as hes deciding to retire from walmart. Final question. Walmart shares, which move up and down a fair bit, but are basically where they were two years ago at about 76 here. Im wondering what can be done, if anything, on managements part to finally get them to break out of that range to the up side and what your target range is for the company . My price target is in the low 80s for the company. We have a modest buy on the stock, an outperform rating, a 2 rating. I think it really will come down to sales. As doug has said, thats a very big focus of his. But the company will continue to be a little bit captive to the economy because it is such a big ship that is in the ocean of the economy. All right. Good to see you both. Thank you, budd. Courtney, thank you, as always. Heading towards the close with about 30 minutes left in the trading session, looks like the dow is trying to come back, down just seven points. S p with a fractional gain keeping it in record territory right now. Coming up, jetblues ceo talks earnings in an interview you wont see anywhere else on tv today. Wait until you hear his take on rising security costs facing this industry. When we come back though, one of the nations leading Venture Capitalists, one of the real pioneers in the industry, says it is a great time to start a company. Not because of the economy but because of all of the money thats available to fund startups right now. Alan patricof talks with us after this. All our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at Charles Schwab 25 minutes left. The market slowly coming back. Nasdaq is now back into positive territory. Dow if we wait long enough might see green. The s p still in record territory, just up over a point on what has been a very quiet day in terms of volatility. No volatility out there. Exciting day for facebook though, bill. Other social media stocks are rising as well. Seema mody is taking a look at that for us at the nasdaq. Facebook showing no signs of slowing down. Stellar Earnings Report is how one analyst described it. To me, sales in mobile ads account for twothirds of all ad revenue. In response other social media stocks are trading higher. Analysts telling me theres hope that these companies will also be able to deliver strong results. We do hear from twitter next tuesday in terms of earnings pandora reports this afternoon. Focus will be on advertising revenue, as well as listening hours. Since we are talking social media, take a look at the social media etf, up about 2 since the fed cited valuation as a concern. Bill and kelly . Seema, thank you. Early this week Carmelo Anthony started hes starting a Venture Capital firm called n7 Tech Partners know cussing on tech and Digital Media ventures. Our next guest says it is symbolic of all the money thats out there right now, willing to take a chance on people starting a new company. Alan patricof, manager, founding director of greycroftllc. Everywhere you turn people are starting a business. Is that symptomatic of where we are in the Economic Cycle or whats going on here . No. I think we have a tsunami that started a couple of years ago with a lot of young people who couldnt get jobs and who decided to go out and break out on their own. Then one person sees the other person and you hear stories about facebook and google and whatsapp and you say if they can do it, im as smart as they are, ill do it also. Theres been a wave of that. That of course, good opportunities, lots of entrepreneurs attracts a lot of money. So the Venture Capital business has been more than good over the last several years. Which is a change. In four years the industry was said to not have generated positive return. The dotcom bust scarred a lot of people. I wonder even use yug tsunami analogy that could happen this time around. I dont think so. There is a memory around. Certainly on the investors part. Dont think theyll repeat exactly what they did before. Theres more caution and discipline in how they are investing. Even with apps like yo and the price tag for whats app and i think a lot of these young companies, the real problem will enter as they go in for later rounds of financing and there may not be as much capital to continue to supply these companies with additional capital. What do you think of the crowd funding sites, alan . Does that attract some decent ideas . Would you invest in some of those ideas or are we just in silly season right now . Well, the things that are working in the crowd funding area are things where it really, seems to me, like kickstarter, where theres a product involved with a watch, something wearable. Yesterday i happened to meet with a Young Company that i think it is called electronic art, which has done funding and raised half a Million Dollars from more than a thousand people that are betting on the product coming out and being users. Are you doing deals even as we speak. Yeah. Were about to do not in crowd funding but closing a deal this afternoon on a Company Called plated. I hope a lot of of your policeners have been using it which is where you use contents instead of going to the Grocery Store and buying two teaspoons of salt and an ounce of oregano around the meat and all the ingredients, it just comes delivered to your house in packs of four people at a time and all the instructions how to make the meal, its growing like top seed, growing like 50 a month. Its been doing that for the last year, year and half. Very entrepreneurial. Two young guys who started it. Theyre getting their second and third rounds of financing because of the success. So if you could prove it, if you can show metrics, if you can show that there is a takeup, then there is a lot of capital around. But the ones who there are so many that have started that dont have those characteristics, it is going to be few and far between the people who get funded on additional rounds. We also think, not just about the entrepreneurship thats happening in new york city but a lot of the fundraising thats happening as well, you are an active fundraiser for president obama. Hes been criticized for all the fundraising hes doing lately. When you see those headlines and the criticism, what do you think. About president obama or fundraising for politics . Both, i guess. Well, listen. First of all, president obama is raising money for the Democratic Party today. Hes not raising for himself. In a way, hes doing yeomans effort on behalf of the democrats. But is that appropriate . Hes every hour that hes president he represents the entur pib lue entire country. I think thats the system we live under. When he goes to these various cities, he does other things that are related to his job as president. I think that its a necessary evil, frankly. Until we get Public Financing introduced in congress and approved, which has been pending for years which ive been very supportive of, even though ive been active in the Democratic Party, ive tried to help pass Public Financing where wed get a checkoff and everybody could contribute a few dollars and we eliminate a lot of this. It feels like in the age of Citizens United thats flefr going to happen. We dont even want to think about Citizens United. It was one of the disasters of this sefths supreme court. We unfortunately have to live with it. Weve kept you over our time. Thank you so much. Important issues all around. Moving higher. Where do we stand . Dow is up eight points right now. Were back to the highs of the session. Believe it or not, thats all it took and the s p up about two points. Thats new alltime high. President obama will be speaking with our Steve Leisman exclusively coming up on a special cnbc program ill be coanchoring with melissa lee starting at 5 00 eastern time right here on cnbc. Theyll talk tax inversions, tax reform, jobs, obamacare, a lot of things so join us coming up. Up next, zillow could be going after rival property site trulia. Does this deal make sense . Well be right back. Althcare yo. At humana, we believe if healthcare changes, if it becomes simpler. If frustration and paperwork decrease. If grandparents get to live at home instead of in a home. The gap begins to close. So lets simplify things. Lets close the gap between people and care. Lets close the gap between people and care. First day of my life by bright eyes youre not just looking for a house. Youre looking for a place for your life to happen. A quick market plash amarka possible deal. Shares of the Online Real Estate Company zillow and trulia are both surging in todays trade after a bloomberg report that says that zillow is looking to buy the smaller rival trulia in a deal valued as high as 2 billion. Thats according to people with knowledge of the matter. Shares of zillow are up 14 on the day. Trulia has gained over 30 in value to around 53. 50 a share which makes it worth just around 2 billion. I mean, i dont know. Would a combined company be called zulia or trillow . They have consultants for that. They spend very big bucks on. Im sure they do. Thank you. So why does zillow buying trulia make sense . Or does it . That is the question. Diana olick joins us now from washington. What are you hearing about the ra rationale for this possible deal . We just laeft big houeft a b conference. Zillows ceo left the conference quite quickly after it ended for the airport. I was told he was headed for San Francisco, which is where rival trulia is based. Zillow, of course, out of seattle. Im just sayin. I had a little email exchange from rascoff but he had no comment. Nothing from trulia either but analysts say it makes perfect sense. As a combined entity, potentially game, set match for zillow. It is all about Pricing Power are around they would be able to add software services. He adds, theres no reason there should be three players in the market. Crt Capital Group calls it a great move. Market of real estate marketing is large. 10 billionplus and still highly fragmented. This deal would give scale, efficiency and accelerate the push toward online real estate market. On the flip side, a warning, in theory, Something Like Keller Williams could put them out of business simply by refusing to syndicate listings or syndicating a simplified version of the listing. Zillow has been spending a lot of money lately acquiring others. Most notably street easy in new york city. It is lovely in San Francisco this time of year. Im sure hes headed to vacation. Thanks, diana. Ten minutes to go now to the close. Indexes have turned positive, ael it be slightly. The dow is up just shy of its prior record closing high of 1,7138. Not the case for the s p. Any positive close will be a record. The nasdaq up about a point and a half. About the same. Up next, it is all about earnings. Names and numbers that you need to watch for after the close, amazon, visa, starbucks, pandora, they could move the market tomorrow. Uld come from anything . Or if power could go anywhere . Or if light could seek out the dark . What would happen if that happens . Anything. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Everybodys positive now. Major averages all turning green in the last few minutes with the dow up 3 1 2. S p in record territory with a gain of almost two points. Nasdaq up two. The flood of earnings coming out in just a few minutes. Domini chu, give us numbers to watch for. The reason why everybody cares is because all the morning reports were massive but it is the afternoon reports that make this the busiest day of earnings season, period. Big names reporting after the bell. Of course you got to focus on the middle of our screen amazon. Com. Thats one everyone is going to be watching because we want to know about the prime service and whether or not it is having a real impact on amazon. Maybe, maybe not. Maybe they Say Something about it during the earnings Conference Call. Regal entertainment group. Visa shares also ones to watch here. Worlds biggest payment processor for credit cards could be an indicator for how consumers are spending, or if they are or not. Starbucks always one we like to watch. Coffee prices in focus especially after dunkins report early this morning. Then on the chinese internet side, always fun to watch. Baidu. Pandora and deckers is one of the more volume tatile stocks a earnings. We have full Team Coverage of all these guys after the bell. See new a little bit here. Well come back with a closing countdown. See if we can get another alltime high for the s p. After the bell, keep it here. Full Team Coverage of the earnings from those companies that dominic chu just mentioned. Stay tuned for that. Youre watching cnbc, first in Business Worldwide. 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But the s p is creeping back into positive territory. Alltime high close yesterday. If youre just joining us, a lot of earnings. Very busy earnings to watch for next hour. These are some of the big names reporting, amazon, starbucks, visa and pandora. Joining us, bob pisani and keith bliss joining us here. We just continued to creep ever higher here. Exactly. This is a market tailor made for creeping higher, melting up. Im looking at some of the Economic Data weve been getting out. Its been middling, sometimes especially housing numbers we got today. Were going to get some good reads about what well do in durable goods. Jobless claims were good. But it doesnt really seal to matter. The capricious nature of this market, it is all about watching the fed and people trying to get ahead of that bet. Watching the earnings, we are approaching 9 Earnings Growth this quarter. 9 we are approaching. A lot stronger than expected. 3 1 3. 5 , 4 revenues. These are excellent numbers overall. I was very disappointed with the Home Building numbers this morning. Particularly the prior month revisions were really disappointing. But to underscore your point about earnings this quarter, i was very surprised and the up side surprise to me was gross sales. Gross trade sales on these companies. The numbers have absolutely been stunning in some of the sectors that weve seen. Outside of Home Builders. But were going to expect that it is going to wax and wane from quarter to quarter. It is true we are advancing every day but it is a narrow advance. I was looking at the new high list yesterday on the s p, there were 50 stocks hitting new highs. Thats onetenth of the s p with an historic high . That means your big cap names, the s p 100, especially, is leading the gains. Russells been lagging for a little while here. Im not seeing everything move up in tandem at this time. Its very true. This time of year youll see some consolidation just because of the slowness in the market. Youre right, we set a new high, consolidate, set a new high, then consolidate. Expect that pattern through the summer. Stand by now. Big flood of earnings coming out. Well see if we get numbers like we got from facebook yesterday. Facebook was a big, big winner today. Stand by now, here they come. Second hour of the closing bell with kelly evans and company. Welcome to the closing bell, everybody. Im kelly evans. We dont want to speak too soon. We got to watch how things shake out here but it does appear the s p 500 adding less than a point will close today at another record high. For the second day in a row, 1,987 is the level. It is the decimal point that makes it matter. The s p 500, the broad market, u. S. Index, closing at another record high. The dow jones giving up three points, remains at pretty well off its closing high of 17,138. Joining me, jon fortt and dr. J, the fast money trader historian jon najarian joins us. Can we just talk for a second, jim, about record highs for the s p against the backdrop of such international tension. What were seeing is the big cap indices. The s p 500, the Dow Jones Industrial average, theyre clawing their way higher. But underneath the surface if you look at what small caps are doing, at what more risky names are doing and you look at what the advance decline numbers are doing, they dont look as good. Furthermore youve got an s p now at 17 1 2 times earnings with a 1. 9 yield. That doesnt stack up as well globally as it did at the start of the year. So i think youre seeing some money start to move in to the emerging markets while the dow and s p just kind of crawl their way higher. Susan, how much against that hate day turn zwroornd get us slightly positive. The increase in treasury yields we saw. How much do you think it has to do with the fact that at 8 30 this morning u. S. Jobless claims, firsttime jobless claims fell below 300,000, at one of their historic lows that weve seen. I do think that is a big factor. The imf just released their growth estimates. From the u. S. Down 1. 7 for 2014. Thats reflective of a really bad First Quarter and we are seeing strong growth coming out of here. Seeing other numbers start to pick up. What im looking for in earnings now is who is increasing sales. Are revenues coming in. Not just cost cutting to make your profit numbers anymore. Earnings null bers still look pretty good for the market here. I think we were up 10 in the First Quarter, up 9 . To your point, a lot of it has to do with some of the Financial Engineering that were seeing, the buybacks playing a big role out there. The number of shares is declining. Youd rather have people increasing that top line than stepping on expenses. Dr. J, do a couple of examples spring to mind . How healthy are earnings keeping that top line point in mind here and just how much further can they propel the Broader Market . If we get something obviously Worlds Largest retailer on the net, amazon, coming out in just moments, kelly, that will be a little bit of an interesting read. Of course what happens in the senate could be even more interesting as far as the weather amazon does indeed is forced to continue to collect these taxes from various i think eight states already with a lot more lined up that want them to collect taxes. But theyre leveling the Playing Field more and more against the retailers like amazon that arent bricks and mortar. Well see exactly how well the consumer has fared in that space in just a few moments. Yes, we will. Jon fortt, so far what have we learned from tech season . Tech i think is still the best performing sector in the s p 500 year to date. Techs doing well so far are this season. We just had this report that we didnt really talk about from logitech last night. They are their music speaker did really well. Thats why it is interesting, pandora just came out and shares are trading down a little bit. Looks like they were just in line. But overall, just curious about amazons online. Stronger overseas for amazon. Going to want to see a strong media line from amazon for them to outperform this group. Jim, i sense your skepticism. What about some of these sectors, tech, financials which did okay today, even though Home Builders not looking as good. I dont know how diagnostic it really is about the retailer consumer. We have seen an increase in online shopping. We all know that. When you look at retail on an aggregate basis, consumer still under pressure here. Wages havent risen. Job growth, a lot of that is the birth death model from the bls well, now wait, thats not entirely true. A lot of it is. A lot of it is. People going back to parttime work, a lot more people are going to parttime work, you look at hours worked, it hasnt really increased. You look at capacity utilization. It is a hard sell to say that were seeing all this acceleration in the jobs market when none of these other metrics are increasing. It is a point and Alan Greenspan echoed this in an interview with market watch as well we just arent seeing the kind of investment we have out of past recoveries. There is Something Different this time. Could have something to do with this debate that continues whether or not a lot of these valuations in the market are justified. We arent seeing the investment. Part of that. Sorry, let me interrupt you for one second. Pandora. Julia boorstin, what can you tell us . Pandora earnings beating estimates by one penny coming in at 4 Cents Per Share excluding items compared to an estimate of 3 Cents Per Share. Revenues coming in right in line with expectations. 219 million. If you look at that stock chart, the stock is dropping off a cliff. More than 8 . It really seems to be because of the Third Quarter guidance. The Company Projects eps to be between 5 cents and 8 cents. Wall street analysts had been looking for 8 cents so that guidance is light. Allimportant mobile number is growing. Mobile advertising reached 76 of total ad revenue and local grew 144 year over year but it is that guidance thats really concerning investors. Jon fortt, yesterday the growth in mobile advertising was enough to have people going crazy for facebook. Today not enough for pandora. I wonder whether it has something also to do with the active listener number. Pandora is reporting 76. 4 million in the end of the quarter, an increase of 7. 5 from the same period the year before. Not a really big increase here in pandora. It is releasing a little less data about listeners going forward. Maybe that one number has people a bit concerned. But overall on the revenue line, theyre guiding a bit above where the street was looking for. Maybe they are just being conservative but well see. Because it is not a small move in the shares. Theyre down almost 9 after hours. There sooms to beeems to be support around that 25 level. Thats where it was in early june, beginning of june. It was a little lower than that i believe in may. Maybe 24, 24 1 2. It will be key as to whether or not people get spooked if it breaks through some of those levels that i just described. Other than that, i agree with john. I think people will look at their guidance forward and how well that is versus what street is looking for. We should note, this is a stock that tends to trade down on earnings just in general. It could bounce back. Its got a lot of competition. Got to talk about these numbers. Visas results are out. Dow component. Mary thompson joins us with the numbers. Visa coming in with stronger than expected results of 2. 17 a share, 7 cents ahead of estimates of 2. 10 a share. Revenue in line with expectations at 3. 16 billion. The ceo noted 159 the 15 incr in eps. Its different business units, service fees, revenues were in line 4. 2 billion. Data processing fees pretty much in line with 3. 2 billion. We saw a little bit of weakness in the International Transactions at 860 million, below what some analysts expected of 906 million. The company also saying that they are seeing class a eps growth of 17. 5 to 18. 5 for the full fiscal year. Visa coming in with better than expected earnings of 2. 2. 17 a share. Are we going to starbucks . Not just yet. Visa, much broader gauge of the economy. I think visa is a good gauge. Do i worry a little bit about that weakness in the International Transactions though. Think thats a massive place where they need to be strong and growing. International transactions. Obviously there are a lot of new competitive players in the u. S. And you are seeing more Competitive Pressures internationally. I want to see them continue to push there a little harder. A lot of people want to come after this space. A lot of startups. Jane wells has got starbucks numbers. Jane. Pretty good numbers, guys. The top line is beat 4. 2 billion. Street predicted 4. 14 billion. Eps, 22 growth. 11 on the top line. Same store comps was 7. 6 . The 17th or 18th quarter in a row where theyve topped 5 . About expected. China came in better than expected samestore sales growth. Operating margin grew to 18. 5 , up from 16. 6 in the last quarter. Starbucks raised coffee prices during the quarter even though it has hedged its raw coffee costs for the entire year. So it was able to leverage that and increase its profit margin. Finally for the 2014 target its narrowed the range. It was 2. 62 to 2. 68. Street was looking for 2. 67 for the eps. Guys, back to you. Those shares not too Much Movement after hours. We are thinking about dunkin as well, its smaller rival. Howard schultz will be on squawk on the street, 9 30 a. M. Eastern. Dr. J, any big surprises to you so far as we dig through these earnings . No. Not in particular from starbucks. Again, Howard Schultz will talk about it tomorrow but in particular, kelly, the fact that theyre hedged, even as the coffee prices go up, of course those hedges against that make you money even though of course you are paying more money out for the coffee. Thus, the hedge. As far as where starbucks is going forward, i thought it was bullish that they were able to raise guidance even though it is only slightly. So maybe it holds on to most of these gains. Jon fortt, what about you . Im still puzzling over whats happening in the consumer space in general, and particularly in electronics. Were going to get a little bit of a different picture even from amazon. This strikes me as the sort of a season where you really need to listen to the call. You saw what happened with facebook after the bell yesterday. It was up maybe slightly until investors got a lot of detail about how the company saw the quarter. Then we saw a spike. With all these stocks that are just moving a little bit based on results, maybe even moving down, i think this is one where we really got to dig in an hear what manage isnt saying about this environment. I think based upon gut reaction, it was down 2 at first. Its really been a swing. Yeah. You look at what consumers are doing across the board. Youre seeing the spaces that have done well, like electronics, continue to trudge along okay, like online sales. Then you look at the numbers in aggregate and they dont look that good. Furthermore, you look at consumer savings rates. Theyre going down while Consumer Debt is starting to go back up. Even though people are putting their money on credit cards, i dont know how healthy it is as a sign of the consumer. How do you recommend people invest right now in this environment given the concerns that youve mentioned, the sense that it isnt real or that it is not as strong or sustainable here for the u. S. Economy as some are inclined to think . Interest rates are still at 2. 5 or so on the 10year treasury. That puts a bit under the stock markets. There is this sense that janet yellen isnt that bullish about the economy and that shes going to have the old bernanke, greenspan, and now yellen put so you hold your nose and buy stocks. I dont think you ought to be too aggressive here. Have some cash on the table. Seasonally we are in the tame frim where the market does tend to hiccup a little bit. I think we ought to be diversifying a little more globally. Hong kong, china starting to break out. We can get better yields over there so sprink that will in to our portfolios as well. It was interesting to hear the caterpillar ceo telling cnbc this morning when it came to china that put out better than expected hsbc numbers overnight he thought the Second Quarter was weaker than the first. Thats a big source of demand for them. But also for every industry here it is a great barometer. Im just reiterating what jon fortt was saying about Consumer Electronics at amazon. Im also interested to see whether or not with those earnings they break out at all some of the streaming numbers, audio and video. Because if thats one of the ways that theyre attacking and clearly going after netflix, then how successful are they with that along with the new phone . Right. Or a pandora. Thats exactly right. And amazon is even going into the payment space to go back to the visa conversation. Theyre really trying to push and they want to be everywhere all the time. Whether they will really make entree there or whether that will backfire a little bit and and waste of resources, we dont know yet but it is interesting to watch. There is a contrast between some of the companies that have figured out how to grow. Facebook certainfully that category and some other companies having a bit after struggle. Twitter is in there. I think pandora is lacking from a lack of domestic smartphone growth. Weve seen growth in emerging markets. China was big for apple. But domestically it was weak. There arent people buying new phones and downloading pandora to add those new listeners. I think maybe thats some of what were seeing. Youve got a tremendous amount of competition for p pandora now. Apple radio. Spotify. All these other things that people are listening to music on. Think pandora has a good growth in front ever it here. Would you agree, dr. J . Last word. Yeah. I think everybody from google to apple, as mr. Kemp just said, is going after these guys. Those are big folks with deep pockets and spotifys in there as well. I dont know that theres room for all of those guys to survive. Well leave it there for the time being. Were not done with the earnings barrage just yet. Well get amazons results next an all this earnings action setting you us up for the main event this afternoon. Steve leismans interview with president obama. What the president has to say about the hot topic of the day, tax invergz. Keep it right here, youre watching cnbc first in Business Worldwide. Kid hey dad, who was that man . Dad hes our broker. He helps looks after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at Charles Schwab president obama speaking out in california. Eamon javers, whats the gist of it . The president taking afternoon more populous tone in the speech in los angeles at the trade technical college, talking a little bit about economic reality for middle class americans right now but we expect later on in these remarks hell get to the issue of tax inversions. Thats something weve talked about on our air for a number of days here. We expect the president will come out against them an say that congress ought to do something to put a stop to it. Kelly. Eamon, thank you. Now the Earnings Results weve been waiting for this hour. Amazon. Lets take a look first, shares, see if theyre moving around as we await further detail on the report. They are to the tune minus 4 , jon fortt. Well get details shortly from our josh lipton whos keeping an eye on things. Estimate was for a 15 cent loss. That would be bigger than its year ago loss. Obviously keeping an eye on dr. J, the cash flow that this company is throwing off. Gross profit dollars, cash, those are two metrics that a lot of people are always scratching their head about the negative earnings figure are watching very closely here. Yeah. Again, kelly, the earnings at least on the surface look like the loss is bigger than that 15 cents that you were talking about, although revenue looks like a match. Maybe a little bit light on revenue, too, depending on which expectations you were looking at. We have josh lipton now joining us with the full details. Over to you, josh. Kelly, amazon just reporting so lets get you those numbers. Revenue pop in 23 to 19. 34 billion. That is smack in line with what the street was looking for. A loss though of 27 cents. The street, remember here, kelly, was looking for about 15 cent loss. So worse than expected. Spinning ahead, looking for revenue between 19. 7 and 21. 5 billion. Analysts estimated 20. 8 billion. Operating income looking for a loss between 410 million and 810 million. Street was expecting basically a breakeven there. You can see those shares trading down in the after hours. Kelly, back to you. Josh, thank you. Wow. Lower minus 5. 5 . Lets bring in Andrew Tanner and bernard golden. Bernard, you know so much about the cloud piece of amazon but the company you follow quite closely. First line of this report from amazon is about operating cash flow. It was up 18 for the trailing 12 months. Free cash flow was more than 1 billion dollars for the trailing 12 months. Greater than a three fold increase from the prior period. On that metrics should investors being giving them the benefit of the doubt here . Theyre growing a ton. They have a ton of businesses they want to invest in. Looks like the company is hitting on all cylinders to me. Well, it should be clear they just did report a 27 cent loss. Well, their stance from the very beginning is rears going to invest heavily in these markets because we believe there are great opportunities in them long term. Were going to invest. I think they are executing against that. Its pretty much what theyve told everyone theyre going to do. I think theyre executing against that pretty well. So andrew, why be profitable if you dont have to be . I think when you look at this company, it is a longterm story line. A company that wants to become the walmart of the web. We know amazons been around a long time but at the same time, this is a company that is really still right at the epicenter of a longterm growth story in Online Retail sales. So the quarter to quarter noise especially below the top line is not something you should worry about. This is long term play and something that investors should be thinking about as a long term stock. Dr. J, is the 27 cent loss noise . Well, whats going to be key is theyre giving you a big guide going forward. The street was looking for 20. 9 billion for the next quarter. Theyve given you a really big range just now saying 19. 7 billion to about 22 billion as far as guidance. Now obviously that would be blowout if they could hit those upside targets. Maybe thats just a lot of what was built in to launch rg the phone, launching their new streaming services and so forth that are all going into that 27 cent loss this quarter. Jon fortt, your impressions . Main concern i see here. Lot of analysts who i was looking at were looking for 24 , 25 year over year revenue pop. It got 23 . But one point of that is actually forex they say in the release, it would have been 22 if not for favorable impact from year over year changes in Foreign Exchange rates. Now it is positive that their shipping costs shipping losses as a percentage of revenue get back down below 5 but the media line was also below 5 billion. A lot of analysts were hoping for something above 5 billion which would have been well above seasonal performance for that line. I dont think all cylinders necessarily are firing here. Not saying the car is swerving offer the road. But for a stock where you really want to see growth, thats what this valuation is based on. Citi saying investors are losing patience in the profit line. There are some things to be concerned with. Their pe multiple, whether or not the company itself emphasized it will be raising some eyebrows especially now. 562 times earnings, you dont have any room for error there. Theyre supposed to grow 200 next year and if they do, theyre going to be at 340 times earnings. This is a Value Investors nightmare. Return on equity is 3 but the cash flow and they are a category killer and theyve killed a lot of categories. Theyre doing a good job of that. I wouldnt even want to short stock here because of the growth metrics that everybodys talking about. But do i want do own this stock, at this price, as opposed to all the other companies out there that are very profitable and selling at very reasonable valuations. You dont have any room for error in this stock and the aftermarket is showing you how. All 5. 5 . We have to leave it there, everybody. Were a little more than halfanhour away from Steve Leismans exclusive interview with president obama. Wall street wants to know what steps the white house is taking to target tax inversion deals and steve has a preview of that big interview next. Plus, jetblues Second Quarter revenue fell shy of wall street estimates. Ceo dave barger joins us to break down the numbers and discuss the alwaysinteresting Airline Industry. Coming up on closing bell. As long as ive lived in iowa, theres always been wind. strauss blue danube playing but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Machines will be sprayed to be made. And making something stronger. Will mean making it lighter. One day, factories will work with the cloud. One day. Is today. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back. We are less than an hour away from Steve Leismans cnbc exclusive with president obama. For a preview of whats coming up, lets bring in the man who sits opposite the president. Steve leisman joining us now, as well as Larry Mcdonald and james kukis. Steve, did you ask the president whether the stock market was in a bubble . I did. And the answer was really interesting. He talks about the relationship of fed policy to the level of the stock market and its an interesting answer. I dont know how much to give away right now, kelly. Thats a tease. Assume you talked about tax inversions, too. I did not lead the president toward the fed. He took the question toward the fed and the impact of fed policy. I was kind of surprised to hear him talk on his thoughts on whether or not the stock market is in a bubble. We also talked about russia. I dont want you to give too much away. I dont want to get you in trouble. Lets talk to larry and jimmy here for a second. To both of you on the important issue of tax inversions, larry, first to you. Is there anything realistically thats going to get done on this issue . No. Essentially the democrats are very, very close to losing the senate. They would lose nine seats in the senate, our work shows, if the race was held today in the midterm elections. And i think the democrats and the white house, their back is against the wall. They want to inflict some pain and they need an issue and this is their starting point. Do you see it the same way, jimmy . Yeah. Listen, i dont think thats going to happen this year at all. Actually, congress is not even in session very much between now and the midterm elections. I am sure business would love to get something done. I think theyd love to get something done on Corporate Tax rates. Theyre not going to get it. Theyd love something on highscale immigration like yesterday. Theyre not going to get it. Now they dont have any certainty on obamacare. Business is really in a quandary. I wonder if the president said anything in that interview to calm them down, i guess. Steve . Kelly, i want to engage larry on this. I have heard this criticism that essentially this is a cynical ploy by the president to get republicans to vote against this issue of keeping american jobs at home. Ive heard that. I just want to ask you, i guess cynically myself, will it work . Is it a potential trap for the republicans if this bill comes to the floor, is this a really bad thing for republicans to be seen voting against . Well, you have it right in the sense that he knows he knows that the republicans want comprehensive tax reform. They dont want to do this piecemeal. Theyve been talking about this. Paul ryan was talking about this two years ago. So youre right, if this wahlstabenow bill comes or amendments come on to other bills, the republicans could potentially look bad because you could say they vote against it now but they just want to do right. Only in america would make a tax system thats so sadistic and byzantine. Then we attempt the symptom. Forget that we have the highest tax rate in the world. But isnt this about the real politics . The tax codes broken and nobody wants to do anything about that. What do you do in that situation where you know what you want, you know you cant get it, and meantime all these companies are inverting. It goes to everything thats wrong with this country now. If we are not able any longer to reach a deal on anything with republicans and democrats, then the economys going to suffer a long time and were going to have flukey Little Things like tax inversions that were going to have to try to deal with. But it wont work. Jon fortt, a lot of these could happen potentially in the tech space next. Thats true. I want to say at the same time, gridlock, relatively speaking, of congress who public and a lot of people think isnt doing much has been great for the markets. The fed has helped. The fed has been great for the markets. The fed has helped, as well. Given all that i dont know it will be interesting to see how far this inversion issue goes. I think if youre in politics youre pretty sure nothings going to get done before the midterms any way. Are you playing cynically perhaps hoping your party will have more power after those elections to get things done. Steve, last word. You know, think i understand that it is probably a responsible move for the president to try to get an antitax inversion bill done, in part because he cant watch the Corporate Tax base erode and see a rush to the exits here. Im not disputing that there is a cynical political aspect to it, but the idea that you could do tax reform in this political environment seems very naive and perhaps this one bill id like to point out that senator carl levins bill enacts an antitax inversion for two years which would appear to give a win dowi window from keeping these inversions for happening. Well leave it there, steve. Interview starts in just about a halfanhours time. Well leave it there. Here we go, kelly. An Interesting Development on the Corporate Board of directors front. In separate press releases, both pepsico and Goldman Sachs have announced director james schiro will be leaving each respective board. Pepsico said woe reline immediately due to health reasons. Goldman sachs announced he will retire from his board to undergo treatment for multiple myeloma which is a bloodrelated cancer. Schiro was previously the ceo of zurich financial services, as well as pricewaterhouse cooper. Hes taking time off to undergo treatment for that cancer. Both boards of direct remembers now one person shy in terms of their respective ranks. Whats the Business Community hoping to hear from president obama, on everything from tax inversions to minimum wage. Former michigan governor john eng glesh weighing in. Plus well ask him about the growing divide between the Business World and the gop on issues like the export impact debate lately. Dave barger is here following earnings this morning. His contract with the company runs out in february. Will he remain ceo past that date. All that and more coming up. I dont always have time to eat like i should. And the more i focus on everything else, the less time i have to take care of me. Thats why i like glucerna shakes. They have slowly digestible carbs to help minimize blood sugar spikes. Glucerna products help me keep everythibalanced. crash ugh im good. Well, almost everything. [male announcer] glucerna. Delicious shakes and bars. He cadillac summer collection is here. During the cadillac summers best event, lease this 2014 ats for around 299 a month and make this the summer of style. Welcome back. Jetblue airways earnings coming in line with estimates today, though missing on revenue. Shares losing some ground today as a result, down almost 2 . Even so, the Company Expects 2014 to be jetblues most profitable year, ever. Joining me now in an exclusive interview, dave barger, the ceo of jetblue airways. I have to start with what a tough period this is right now for the airline space. Weve had planes shot out of the sky, weve had a couple of tragic accidents in just last couple of days. Are you seeing any impact on your business . Were not. But unprecedented when you think about whats happening in the world with aviation safety and security. Unprecedented. But what we are seeing close to home is this is a strong Summer Season and people are traveling. How much International Exposure do you guys have . About 30 of our flights. I spoke with the ceo of Hawaiian Airlines said same kind of thing, his business look, it is hawaii, its travel, it is relatively elastic to some extent. It certainly doesnt respond to whats been happening in europe and the middle east the way others might. Is that your experience as well that you are shielded from this . I dont know if id say shielded. But it is somewhat maybe immune when i think about whats happening with our geography versus these events in the world. Whether it is, again, australia or whether it is in ukraine or the events in to taiwan earlier today. Absolutely. Algeria. So it is i think more immune. But listen, the industry, its top of the pyramid when you think about safety and security. We spoke also i think with csis who had on a program talking about the terrorism threat to u. S. Airlines which they said was more significant today than at any time, perhaps even including right before 9 11. That being the case and some of the restrictions weve seen on Airlines Flying in to this country, what does that mean for security costs for you guys, what kind of backup and monitoring plans do you have . Is this all going to be an additional invest. An addition cost in your quarters to come . When you think about first of all safety and security, we dont think about what does that cost. Right . Thats the price of doing business. I think when we look at the events of the world, it is more how are organizations like the u. N. Arm of civil aviation, airlines for america here in the United States, how are we communicating regarding whats happening across the world with organizations like the faa, euro control. How do we have better intelligence as well. How do we . Whats the answer . We do. But this is unprecedented. Shooting a missile at a commercial airline her in a path that is open . It is an attack on humanity, our industry. This is unprecedented. Its barbaric. Certainly we have to hold people accountable. Criminal events took place shooting this plane down. Thats the issue bringing together organizations together. Why is it also the case that these aircraft arent equipped with technology that will allow whether they go down in the indian ocean or over the continent of africa, us to pinpoint them every second, every moment along the way. This is interesting. Because technology is available today. As we think about the ability to communicate with a satellite from an aircraft today, across the world, assuming there is satellite coverage, that technology is available. This is the first event that you talk about off australia. This is something that the industry is taking very seriously. Because again, we should be able to have do all of your aircraft have that Location Technology . We have the technology, but again, its lets invest in modernizing the air Traffic Control system. We are still using groundbased radar system why . Whose responsibility is that . Can you take that and make an issue and make it happen . Oh, and we are. You talk about security costs earlier today. Or in the interview. Cost of security with the tsa and the United States went from 2. 50 to 5. 60 per customer. Listen, the issue is lets use that money to invest in modernizing technology in improving security as opposed to reducing the deficit. Lets use it for security. Lets use some this is an industry thats taxed over 20 . Lets use some of that taxation to invest in Satellite Technology to navigate aircraft and have positive, positive point of reference regarding our aircraft or anybodys aircraft across the world. This is where again washington, d. C. , i mean my message the industrys message, please understand how important aviation is and invest in it as opposed to tax us like alcohol, firearms, tobacco. Thats just heinous really at the end of the day. Understood. Now where going forward, putting that issue swla to the siomewha, where does jet blblue stand . Do you want to be everybody else or do you want to be one of the big guys . Well, for us, this industry in the United States is consolidated and when i think about our position, the different position, the Super Network guys, thats not what were about. The super discounters, thats not what were about. Our message to wall street or to investors i think were seeing this in the industry, blue bankruptcy and consolidation theres space for a third model in the Airline Industry. Thats what we want to be known for. Again, ten straight jd power and associate awards best in category across any airlines in the United States. Thats what i want consumers to think about. Thats going to benefits shareholders and our crew members. My plan is to continue leading the company. Were always talking about a governance, Good Governance in the company. Well have further discussions later this year but we just had a board of director off site. It was a terrific meeting. Im sure that means good things ahead. I certainly hope it does for the whole industry and certainly all of us who travel on these planes. Big names, big earnings, big day. Dominic chu will put it all in perspective just ahead. Big issues from immigration reform, tax inversions, former michigan governor and president of the current michigan roundtable, john engler is next. When the world moves, futures move first. Learn futures from experienced pros with dedicated chats and daily live webinars. And trade with paper money to testdrive the market. All on thinkorswim from td ameritrade. Moderate to severe is tough, but ive managed. I got to be pretty good at managing my symptoms, except that managing my symptoms was all i was doing. When i finally told my doctor, he said my crohns was not under control. He said humira is for adults like me who have tried other medications but still experience the symptoms of moderate to severe crohns disease. And that in clinical studies, the majority of patients on humira saw significant symptom relief. And many achieved remission. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal infections and cancers, including lymphoma, have happened; as have blood, liver, and nervous system problems, serious allergic reactions, and new or worsening heart failure. Before treatment, get tested for tb. Tell your doctor if youve been to areas where certain fungal infections are common, and if youve had tb, hepatitis b, are prone to infections, or have flulike symptoms or sores. Dont start humira if you have an infection. If youre still just managing your symptoms, ask your gastroenterologist about humira. With humira, remission is possible. Until recently, the Business Community and republicans in washington were aligned in common interests on seemingly everything from free markets to lower taxes, et cetera. Lately though there has been a split. For example, the Export Import Bank, Business Community in agreement with most democrats in the white house about renewing the charter. On the other side, hardline kfbz, especially some in the tea party, call it crony capitalism. Immigration reform is another topic. Joining me now, john engler, former governor of michigan, now president of the michigan roundtable. Great to see you this afternoon. Are we mischaracterizing this or is there a split between not only the Business Roundtable and the gop but also the Business Roundtable and the chamber of commerce and the chamber of commerce and gop. Just seems as though the world is fragmenting. Well, it shouldnt be. I certainly think that most people would agree with us that America Needs more jobs. We need a higher level of investment. Wed like to see millions of people that are underemployed get better jobs and people that have left the workforce come back and go to work. Start having an economic expansion that has gdp in a positive range rather than the First Quarter negative 2. 9 . I take your point. Look, we all want growth. This really comes down to whether you guys can get your agenda accomplished in washington and if you do, it is with the help of who . The democrats . Are you uncomfortable being associated with the Democratic Party . Look, well work with anybody who will work with us because job creation is everybodys business and it should be. When i look at the data, weve got an election in november. The number one issue in america, far and away, is economic growth, job creation. Thats what people want to hear from both parties and so id be out there competing as a candidate on that basis and, frankly, id be talking about things that make a difference. When we look at what matters, the Investment Climate in the United States matters a great deal. We should be leading a global recovery, and frankly, were doing okay, were improving a little bit but were not shooting the lights out. I want to get the panels thoughts on this. Susan . Governor, to go with the Export Import Bank, they are supporting over 200,000 jobs in the u. S. Theyre helping 3,400 Small Business transactions just last year. And they put out a report to congress, or recent report to congress, talking about the increasingly competitive Global Environment and how we need to make sure that u. S. Businesses are able to compete on the global stage when there are all these aggressive export credit agencies in other countries. So what kind of case are you making to your fellow republicans to actually reauthorize the ex im bank . Believe me, there is some head scratching going on. The same members from Congress Come from states that compete vigorously for business and jobs. I saw recently that texas, which happens to be the state that uses the Export Import Bank the most of any of the 50 states, was very proud of the jobs that moved by toyota from california to texas. And other states likewise boast about winning a competition for a new manufacturing plant, a new headquarters, and yet what we dont understand in washington, seemingly, is that same competitions going on today among nations. And u. S. Is in that competition. Were a nation that has to compete with other nations, be they asian, european or wherever they are in the world. So we can say, well, look, we can win this based on our good looks an our reputation, or we could win it on the bottom line. Frankly, the bottom line is what matters today and some of these is it really helping all businesses i mean if you look at the airline look at the Airline Industry, it helps the Airline Industry, but the Airline Industry doesnt need a lot of help. There is only two major manufacturers out there and there is a lot of people flying on airplane these days. Even the ceo of delta was on this show yesterday saying he was opposed to the Export Import Bank. Can you target Small Businesses that do hire people and helping out big businesses that dont really need the help . Well, i think, you know, richard arounders anderson make a very good points. One of the things he is trying to say is, look, there are purchasers of airplanes, where they dont need the help. He is not saying somebody buying a bulldozer from the caterpillar in the u. S. Doesnt need help from a bulldozer, say, from japan. What theyre saying i think and thats different tan people say lets just kill the Export Import Bank all toke. Thats not what delta is saying. I do think that congress ought to look at what the competition is, what other nations. In some cases, u. S. Companies competing against isnt even an independent company. Its actually a stateowned enterprise, that competition is pretty tough. Today in the world they use incentives. We ought to be able match the competition. Thats the point. Governor, we have to leave it there, so we can hear from the president on the very point. I appreciate your time this afternoon, john eng ler, he says he will work with anyone. Do you need a job jolt for your portfolio, how the lights of starbucks, other brands if todays earnings releases, we will check the after Market Action in these shares and realtor to the rich and famous will join us with the installment of Million Dollar homes at this time with a twist. You get to vote for the winner, dream dance cnbc. The winner will be revealed here on the closing bell. Well be right back. trader vo i search. Share your passion for trading. You do a lot of things great. But parallel parking isnt one of them. Youre either too far from the curb. Or too close to other cars. Its just a matter of time until you rip some guys bumper off. So, here are your choices take the bus. Or get Liberty Mutual insurance. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. See Car Insurance in a whole new light. Call Liberty Mutual insurance. Welcome back. Its been another wild session after the bell. Dom physical chu joins us with the recap. We will start with amazon taking a dive. The retailer posting a Second Quarter loss versus estimates for a 15 cent loss here. Pandora sinking after hours. The Internet Radio company reporting earnings above stills, like Third Quarter everyone, per sare guidance there. Internet company is beating estimates, baidu is the chinese google that beat earnings and revenue per share growth. These are the movers. It seems its wonderful how mean and clean it seems at this hour. Next, we will look back and talk about water coming up. Steve leasemans ice mans s exclusive with president obama. Moments away. Stay tuned. If energy could come from anything . Or if power could go anywhere . Or if light could seek out the dark . What would happen if that happens . Anything. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. But what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Welcome back. The panel is with me as we await president obamas interview with steve liesman, the tax inversion, everybody says, dont matter, nothing will be done to stop it. Is there anything that can be done . I am more optimistic than anybody. I wouldnt expect him to announce it, especially retroactively. We will make it apply to you, anyway it puts enough of a kernl el of doubt in the ceos mind. Do you agree . I dont think he has a stroke before the election on this. As we go back to the market, i think we will look at again the major averages clawing their way higher. Underneath the surface, not that good. Then we saw these earnings after the close that probably arent going to help those over the surface names. Pretty much google hit the basement, whatever you want to call it . Hes the least popular president in about eight years. Which poll are you looking at . Im thinking about beyond this interview, which im eager to see, water going to happen tomorrow with these momentum names like pan do ra and amazon, is tear time finally up . Netflix is down 5 from its earnings . What it will mean for the nasdaq, a reminder, the s p 1500 closed at a record high. It has done that more than two dozen times this year. It could have an impact on markets as well. That does it for us here on the closing bell. Steve liesman interviewing president obama begins right now. We have now seen the fastest job growth in the United States in the first half of the year since 1999. The current u. S. Tax system puts u. S. Companies at a disadvantage. What our country failed to do was keep pace and make our country globally competitive for corporations. Our corporate tags situation is an abomb nation. I am opt mick about the economy. We need to focus on measures that puts money in peoples pockets so they spend it. I wouldnt if i were you invest if russian equities right nowfuls you are